Insurance Glossary
Plain-English definitions of the terms you'll find on plan documents and benefit statements.
Last reviewed October 2026 by Delta 4 Benefits.
A
- assignment of benefits
- When you assign benefits, you sign a paper allowing your hospital or doctor to collect your health insurance benefits directly from your insurance company. Otherwise, you pay for the treatment and the company reimburses you.
B
- benefit
- reimbursement for covered medical expenses as specified by the plan.
- brand-name drug
- prescription drug which is marketed with a specific brand name by the company that manufactures it. May cost insured individuals higher co-pay than generic drugs on some health plans. (see “generic”)
C
- carrier
- insurance company insuring the health plan.
- certificate booklet
- the plan agreement. A printed description of the benefits and coverage provisions intended to explain the contractual arrangement between the carrier and the insured group or individual. May also be referred to as a policy booklet or certificate of coverage of insurance.
- certificate of benefits (COB)
- the plan agreement. A printed description of the benefits and coverage provisions intended to explain the contractual arrangement between the carrier and the insured.
- claim
- notification to the insurance company from the insured or health provider (if you have assigned benefits) that a payment is due under provision of the insurance policy.
- co-insurance
- the percentage of covered expenses an insured individual shares with the carrier. (i.e. for an 80/20 plan, the health plan member’s co-insurance is 20%). If applicable, co-insurance applies after the insured pays the deductible and is only required up to the plan’s stop loss amount (see “stop loss”)
- co-pay/co-payment
- the amount an insured individual must pay toward the cost of a particular benefit. For example, a plan might require a $15 co-payment for a doctor’s office visit.
- COBRA (Consolidated Omnibus Budget Reconciliation Act)
- a federal law in effect since 1986. COBRA permits you and your dependents to continue in your employer’s group health plan after your job ends. If your employer has 20 or more employees, you may be eligible for COBRA continuation coverage when you retire, quit, are fired, or work reduced hours. Continuation coverage also extends to surviving, divorced or separated spouses; dependent children; and children who lose their dependent status under their parent’s plan rules. You may choose to continue in the group health plan for a limited time and pay the full premium (including the share your employer used to pay on your behalf, plus an administration fee). COBRA continuation coverage generally lasts 18 months, or 36 months for dependents in certain circumstances.
- covered expenses
- A covered expense is any service and/or product that is covered by the insurance contract as defined in the Certificate of Benefits or Policy Booklet.
D
- deductible
- the dollar amount an insured individual must pay for covered expenses during a calendar year before the plan begins paying co-insurance benefits.
- dependents
- usually the spouse and unmarried children (adopted, step or natural) of an employee.
E
- effective date
- the date requested by an employer for insurance coverage to begin.
- exclusions
- expenses which are not covered under an insurance plan. These are listed in the Certificate Booklet/Policy.
- explanation of benefits (EOB)
- a carrier’s written response to a claim for benefits.
G
- generic drug
- the chemical equivalent to a “brand name drug”. These drugs cost less, and the savings is passed onto health plan members in the form of a lower co-pay.
- grace period
- a specified period immediately following premium due date, during which payment can be made to continue the policy in force with out interruption.
- group insurance
- an insurance contract made with an employer or other entity that covers individuals in the group.
H
- health maintenance organizations (HMO) plans
- were formed with the idea of controlling cost and providing preventative health care before members get sick. HMOs are comprised of hospitals, doctors and other medical personnel who have joined to provide health care to members in return for a pre-paid monthly charge. You can go to the provider as often as you need for the same monthly cost and an additional small fee per office visit or prescription. Most other medical services are fully covered. You do not have the option of going to a medical provider who is NOT part of the HMO. Enrollment is usually limited to employer groups, but a few HMOs will take individual members.
- HIPAA
- The Health Insurance Portability and Accountability Act was passed in 1996 to help people buy and keep health insurance, even when they have serious health conditions, the law sets a national floor for health insurance reforms. Since states can and have modified and expanded upon these provisions, the regulations vary from state to state.
- HSA
- A Health Savings Account (HSA) is a special account owned by an individual used to pay for current and future medical expenses. HSAs are used in conjunction with a “High Deductible health Plan” (HDHP): Insurance that does not cover first dollar medical expenses (except for preventive care). Can be an HMO, PPO or Indemnity plan, as long as it meets the requirements.
I
- in-network
- describes a provider or health care facility which is part of a health plan’s network. When applicable, insured individuals usually pay less when using an in-network provider.
- indemnity plans
- give you complete freedom to choose deductibles and co-insurance. You may go to any doctor that you choose. You must pay the full deductible before the insurance plan pays any amount. After this deductible is met, the insurance plan then pays a certain percentage of the expense. You are responsible for the total difference between the percentages the insurance company pays and the amount charged.
L
- lifetime maximum benefit
- the maximum amount a health plan will pay in benefits to an insured individual. Under the Affordable Care Act, ACA-compliant plans can no longer set lifetime dollar limits on essential health benefits.
- limitations
- conditions or circumstances for which benefits are not payable or are limited. It is important to read the limitations, exclusions and reductions clause in your policy or certificate of insurance to determine which expenses are not covered.
M
- managed care
- the coordination of health care services in the attempt to produce high quality health care for the lowest possible cost. Examples are the use of primary care physicians as gatekeepers in HMO plans and pre-certification of care.
- medically necessary
- many insurance policies will pay only for treatment that is deemed “medically necessary” to restore a person’s health. For instance, many policies will not cover plastic surgery for cosmetic purposes.
- Medicare
- a Federal program which provides medical insurance for people age 65 and older and for those who are permanently disabled. Contact your local Social Security Office for a copy of the current Medicare handbook.
N
- network
- a group of doctors, hospitals and other providers contracted to provide services to insured individuals for less than their usual fees. Provider networks can cover large geographic markets and/or a wide range of health care services. If a health plan uses a preferred provider network, insured individuals typically pay less for using a network provider.
O
- out-of-network
- describes a provider or health care facility which is not part of a health plan’s network. Insured individuals usually pay more when using an out-of-network provider, if the plan uses a network.
- out-of-pocket maximum
- the total of an insured individual’s co-insurance payments and co-payments.
P
- point-of-service (POS)
- health plan which allows the enrollee to choose HMO, PPO or indemnity coverage at the point of service (time the services are received).
- pre-certification
- an insurance company requirement that an insured obtain pre-approval before being admitted to a hospital or receiving certain kinds of treatment.
- pre-existing condition
- a health condition you had before your coverage started. Under the Affordable Care Act, ACA-compliant health plans, including employer group plans and individual marketplace plans, cannot refuse coverage, exclude a condition, or charge more because of a pre-existing condition. Some products that are not ACA-compliant, such as short-term medical plans, may still exclude them.
- preferred provider organization (PPO)
- Plans allow you to choose a doctor or hospital from a list of “preferred” providers in order to receive full benefits. If you go to a doctor or hospital who is not on the list, the plan may cover a smaller percentage or none of your costs. Check with the insurance carrier BEFORE you use the plan to make certain your physician or hospital is a contracting provider. Make certain your doctor refers you to other providers who are on the list, or who the carrier agrees to pay at the “preferred” rate.
- primary care physician (PCP)
- The doctor whom you have chosen to provide basic healthcare services. This is the doctor which would perform wellness visits and such. You will typically see your primary physician for any illness, he will then refer elsewhere if he/she feels another doctor or facility can provide better treatment for the issue.
- provider
- any person or entity providing health care services, including hospitals, physicians, home health agencies and nursing homes. Usually licensed by the state.
R
- referral
- required in many managed care plans, transfer to specialty physician or specialty care by a primary care physician.
- rider
- a modification to a Certificate of Insurance policy regarding clauses and provisions of a policy. A rider usually adds or excludes coverage.
U
- usual reasonable & customary
- the charges that a carrier determines normal for a particular medical procedure in a specific geographic area. If charges are higher than what the carrier considers normal, the carrier will not pay the full amount charged and the balance is the insured’s responsibility.
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